Saudi Arabia could run out of oil stocks available for export within days if it fails to restart a major pipeline to the Red Sea damaged in drone attacks, potentially removing up…
What the source says
Saudi Arabia could run out of oil stocks available for export within days if it fails to restart a major pipeline to the Red Sea damaged in drone attacks, potentially removing up to 4% of global supply from the market, according to Saudi oil buyers and industry traders. Satellite images released on Sunday appeared to show a pumping station along the 1,200-kilometre East-West pipeline charred and heavily damaged following Friday’s drone strikes. Any further reduction in Saudi oil flows would deepen a global supply crunch that has already driven fuel prices to record levels and fuelled inflation worldwide, according to a report by the Guardian . The latest disruption comes as Yemen’s Iran-aligned Houthi forces have stepped up attacks on targets in Saudi Arabia and captured the strategic island of Perim in the Bab El Mandab Strait, strengthening their control over the key maritime passage. Brent crude, the international oil benchmark, rose more than 3.4% on Sunday to $108 a barrel, its highest level since May. Saudi Arabia has yet to provide details on the full extent of the damage or how long the pipeline will remain out of service. Riyadh has blamed the attacks on drones launched by militants from Iraq. Sources familiar with the situation gave Reuters varying estimates for repairs. One said the damage could take up to six weeks to fix, while another said the pipeline could be repaired sooner and partially resume pumping while work continues. Saudi Arabia’s government media office and energy ministry did not immediately respond to requests for comment. The East-West pipeline has become increasingly important to Saudi Arabia over the past six months, allowing the world’s biggest oil exporter to bypass the wartime closure of the Strait of Hormuz, which has severely disrupted exports from neighbouring countries. Saudi Arabia has been using the pipeline to divert about 4 million barrels of oil per day — roughly 4% of global supply — to the Red Sea port of Yanbu. With the pipeline shut, Yanbu has enough stocks to sustain exports for only five to seven days, according to three industry sources familiar with Saudi shipments. A fourth source said Saudi Arabia also held stocks at Egypt’s Ain Sukhna port on the Red Sea and Sidi Kerir on the Mediterranean, which could support exports for several more days. However, the four sources said those stocks were not sufficient to sustain exports indefinitely and would eventually run out unless the East-West pipeline resumes operations. Oil prices climbed further as hopes for a near-term diplomatic breakthrough faded. Oman’s Foreign Minister Sayyid Badr Albusaidi said late Sunday that a regional meeting scheduled for Monday had been postponed “in the interests of consensus”. Iranian officials had planned to attend the meeting with Gulf Arab states to present an agreement reached with Oman on managing shipping through the Strait of Hormuz. The strait was open to unrestricted transit before the war, but Iran now requires vessels to obtain permission to pass and is considering a mechanism to charge service fees. The disruption to crude supplies has also pushed up prices of refined products, including petrol and diesel. US diesel prices hit a record on Friday, rising above $6 a gallon on average. The Houthis have targeted Saudi oil infrastructure and shipping as part of a recently declared blockade, while their latest territorial gains have brought them closer to a major US military base in Djibouti. The escalating conflict in the Middle East has entered its seventh month after the United States and Israel launched attacks on Iran on February 28. US President Donald Trump had initially predicted the war would end within four to six weeks.
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